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Stock Market News for November 1, 2012

It was business as usual for markets on Wednesday following two days of closure due to Hurricane Sandy and it ended almost flat yesterday. This was for the first time that markets were closed for two consecutive days due to weather problems since 1888. Meanwhile, all three major indices fell sharply for the month, with the Dow tumbling nearly 2.5%. Homebuilder stocks were the major gainer among the S&P 500 industry group.

The Dow Jones Industrial Average (DJI) slipped 0.1% to close the day at 13,096.46. The Standard & Poor 500 (S&P 500) edged up 0.02% to finish yesterday’s trading session at 1,412.16. The tech-laden Nasdaq Composite Index dropped 0.4% to end at 2,977.23. The fear-gauge CBOE Volatility Index (VIX) gained 4.4% to settle at 18.60. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.3 billion shares, lower than the daily average of 6.51 billion shares. Advancers outpaced the decliners on the NYSE; as for 56% stocks that gained, 41% stocks closed in the red. For the month, the Dow tumbled 2.5%, the S&P 500 dropped 2.0% and the Nasdaq dropped 4.5% following lower-than-expected earnings from blue-chips companies and gloomy global economic conditions.

Benchmarks reopened trading after a two-day closure caused by Hurricane Sandy. Larry Leibowitz, chief operating officer of NYSE Euronext (NYSE:NYX), said "The open was a positive relief after four days of sitting on edge," and added "No matter how much planning you do, you can't foresee that kind of flooding".

Looking at the economic impact of Sandy, various forecasts predict the storm will cause damages of up to $50 billion. Earlier, Eqecat, a disaster modeling company, had projected that the U.S. economy may incur losses between $10 billion and $20 billion. Separately, Kinetic Analysis Corp is projecting losses will reach $25 billion; while its research and development director said insured losses could amount to between $7 billion to $8 billion. Forecasting firm IHS Global Insight estimates that property damages may touch $20 billion and another $10 billion to $30 billion will be incurred as lost business. The storm has already left about 8 million houses without power and thousand of flights have been cancelled. Also, about 70% of East Coast oil refineries were forced to remain closed. Moreover, New York has been severely affected and this region substantially contributes to the nation’s economic output.

A batch of companies reported their earnings yesterday. General Motors Company’s (NYSE:GM) shares surged 9.6% following better-than-expected quarterly results. According to General Motors, the company targeted a rebound from loss to a breakeven level in its European operations. On Tuesday, Ford Motor Company (NYSE:F) had posted its quarterly results; wherein it reported a 17.6% year-on-year surge in its third quarter earnings. The company’s shares surged 8.2% yesterday.

In economic news, Automatic Data Processing’s (NASDAQ:ADP) National Employment report stated that the U.S. private sector employment increased by 88,200 in the month of September from 76,400 in the month of August. The September report was based on their new methodology. According to the report, large businesses added 35,800 employees, whereas medium and small business added 28,000 and 24,300 employees, respectively, in the month of September. Service sector jobs increased by 97,500, while goods producing jobs decreased by 9,300.Construction companies added 9,100 jobs and employment in professional and business services increased by 17,400.

Meanwhile, the Chicago Purchasing Managers index edged up 0.2 points to 49.9 in the month of October from 49.7 in the month of September. This was below consensus estimates of 51.4. According to the report, five of the seven business activities reflected weakness. Expansion in employment touched its lowest level in 33 months.

The technology sector was the major loser among the S&P 500 group of companies with Apple Inc. (NASDAQ:AAPL) losing 1.4%. Apple’s shares tumbled over 15% from an all-time high reached in mid-September. Stocks such as Hewlett-Packard Company (NYSE:HPQ), Intel Corporation (NASDAQ:INTC), SanDisk Corporation (NASDAQ:SNDK), NVIDIA Corporation (NASDAQ:NVDA) and Texas Instruments Incorporated (NASDAQ:TXN) lost 1.7%, 1.5%, 1.1%, 0.6% and 2.2%, respectively.

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